How much do you guys see Brooklyn blue chip falling?

I don't see how they CAN'T go down. 25-30% drop from here? What were they selling for in 2002? What are they selling for now? I'm not saying that things should go down to 2002 prices, but we need to look at what caused the HUGE run-up in price from then to now.

Everyone keeps saying New York is different. But, New York real estate sky-rocketed with the rest of the country over the past 7 years. Why should it be different on the way down?

Well, prices have dropped a bit, but not as significantly as in the rest of the city. Seems like they have further to fall, right? But we're still seeing pretty brisk activity (both rentals and sales). If there's another big gut check in the economy, I imagine we'll see that reflected in the prices. In the meantime, we're pretty busy out here.

Tina
(Brooklyn broker)

many gentrified brooklyn nabes had run-ups that will never ever go down much. the neighborhoods of 2009 are not the same neighborhoods of 2002 unlike, say uptown or the west village. the neighborhoods are changed forever and not considered in the same way at all. some of the "cheapness" of the 2002 prices were because of the locations. I bought my first property (a brownstone) in cobble hill in 1997, and I couldn't believe how undervalued it was - all because the location didn't yet have mainstream acceptability.

also, don't forget that the population will increase and increase. besides yearly population growth on the planet as a whole, we have seen a massive change in demographics. Families are not moving to the suburbs, as we have all heard and read. There is now the largest amount of children under the age of 5 in NYC in history. This is a huge shift. As family size apts or townhomes are cheaper in Brooklyn, this phenomena leads to more Brooklyn gentrification. My condo building has so many kids - maybe 20 or 22 out of 36 apts and there's a pregnant woman. People bought family sized apts, and since I know all these people personally, I know for a fact that they intend to stay and that their purchases were for the long term (of course, stuff happens, who knows), but my point remains - families have invested for the long run in Brooklyn.

Meanwhile, NYC will continue to attract investors and part-time inhabitants (probably mostly in manhattan) as rich guys and celebrities from all over the world will buy up property. Maybe not today, but definitely this trend will continue for years to come. Also, there's been a dramatic increase in filming in NYC with new studios and more on the way and city tax breaks to film here and use NYC locations, so this has kept celebrities here more than in years prior. When rich guys buy up manhattan properties, it forces more regular folks into Brooklyn.

Also, as a 12 year brooklyn resident, i can say that many of us have a Brooklyn only mentality. There is zero zero way I would live Williamsburg if I am not forced to. In my mind, Manhattan is for tourists, finance guys, frat boys, and the B T crowd. Hope they all enjoy themselves, but it's not for me.

More than Manhattan and Manhattan will likely fall 75% or more. Brooklyn property owners seem to be in a bit of denial. As Manhattan continues to decline, Brooklyn will decline even faster. I would get out if you own. Look at this statistic re: Manhattan RE. Not sure about the Brooklyn numbers, but they may be even more outrageous.

According to Bloomberg "In 1999, the median sales price of all Manhattan apartments was just $310,000. By 2004, it almost doubled to $605,000. The average price per square foot rose from about $400 in 1999 to $1,251 last year."

Sebb, I agree it's hard to say, but Brownstoner's a great resource for discussion on townhomes in the nabes you specify (brownstoner.com). Check out the "Open House picks" and "Open House picks - Six Months Later" postings. It's nothing scientific, but a good sampling of activity for that market.

Most stuff has been selling off-ask, sometimes significantly, but actual sale prices don't seem to be down more than 10-15% for that type of housing.

"many gentrified brooklyn nabes had run-ups that will never ever go down much. the neighborhoods of 2009 are not the same neighborhoods of 2002 unlike, say uptown or the west village. the neighborhoods are changed forever and not considered in the same way at all."

While I agree with the concept that for a lot of neighborhoods (not just in Brooklyn) the change in the general nature of the neighborhood will mean prices will not return to the "level" of a given prior YEAR (like "priceswill fall to 2002 levels"). But one of the reasons is that there was a double sip if price increase in a lot of those neighborhoods. While they won't lose the increase in value, they are STILL subject to the same "market" rate downturns as every other neighborhood. Many of these neighborhoods saw EXTREME run-ups as a result of the double dip run-ups, and as a result there's a lot of air in the peak prices. Just like Harlem: you're seeing tremendous downward pressure on prices even as gentrification continues. I think the same thing will happen in Brooklyn: in some of these neighborhoods you will see 2 components to their prices: a continued increase of 5% to 10% (yes INCREASE) due to neighborhood improvement, because the new projects will get completed and get relative quality improved occupants, but the second market component of whatever the rest of the market does (let's say somewhere between 25% and 50%?). These 2 components will be additive, so you'll get a plus 5% to 10% and a minus 25% to 50%. The NET result will still be in the negative direction.

30yrs, that's a really good post. I think it underscores just how difficult it is to call - especially in "newer" neighborhoods, there will be a component in value maintained by the rapid infrastructure/amenity improvements, but everything's subject to market forces, no doubt. I think it'll vary greatly, not only from neighborhood to neighborhood, but also from building to building.

Wisco you make a great point BoCaCo is my favorite area.

ok..now you can jump up and down on my head but...

there may not be infinitely elastic demand for nyc real estate even with lower prices. the discussion about vacancies in commercial real estate is probably a clearer potential for what I am positing.

it is possible that budding individual retailers will say to hell with it---its just too damn complicated and expensive and not worth the hassle while national retailers are already starting to cut locations across the country. B&N is no longer opening new stores without closing old ones--witness east 86th st.

the former circuit city space on the upper west side is not going to attract yet another best buy.

cc: how can you bring that subject up and not mention how many Starbucks locations are closed or slated to close? Especially as they were a "big deal" in terms of "what was going on in retail in NYC" just a few short years ago.

But I agree with you about "budding retailers". I have no stats to back this up, but I think, from what I've seen, the percentage of retail openings over the past 5 years which were/are franchises or other forms of "chain" ownership is staggeringly higher than historically has been seen in NYC.

"BoCaCo"

I think you've been watching too much porn.

i think we are agreeing?

which brings me to point two about your discussion of different neighborhoods. if overall population starts to decline in manhattan, i think we will see a LIFO situation that could become quite dramatic.

Brooklyn did start falling after Manhattan, so I think it will decline a bit longer.

My take is, it will probably match the manhattan decline minus another 5 to 10%... it will suffer from the same income factors, but I think you also have to account for the end of the "buy anything and it will gentrify" concept and the cooling off of the "hot" factor.

"i think we will see a LIFO situation that could become quite dramatic."

If what you mean is individuals, I don't think you'll see as much LIFO, in part because all the last one's in who bought will likely be trapped there. If, OTOH, you mean RTE values in neighborhoods, it's almost always that way. But it's not always that way in terms of quality of life in those neighborhoods: there have been plenty of examples where RE prices crashed, but "life" went on without much change. I'll take my usual example of the East Village: got gentrified up till the 1989 crash, but even though you couldn't sell for shit for quite a while, quality of life did not retrench back to what Alphabetic City used to be (can I use Wild West to describe the far East?). The neighborhoods i DON'T think will survive as well in the LIFO scenario are the one's which never actually really gentrified, but you merely had some idiots overpaying for crap (I think of parts of Bed-Stuy and the like).

You also have a big difference in th 2 different types of was neighborhoods boom: You have areas like the EV, which were "bad" and then slowly turned good (or at least ok) and then you had areas like Tribeca which went from not being a neighborhood at all (at least in the residential sense) to a good (at least $ wise) one. That's because it's a lot easier to convert a non-residential area than a commercial one to more upscale living (BTW people should think about this when they argue how great RS and RC are).

agreed except....

none of us have ever lived through an economic situation like this one (except for my 98 year old aunt!). what does trapped look like when you lose your job? here are the keys, enjoy.

I disagree about "none of us have ever lived through an economic situation". You saw it regionally. Like right here in NYC during the 60's ?and early 70's? when "white flight" RUINED a lot of formerly "ok" areas in the city. that is where I think you would get a WAYYYY different outcome. I can't tell you why, but my gut tells me no matter how bad things get, that's not going to happen this time. I think you'll just get more strippers..... um....... "actor/model/waitresses" coming to NY because they will be able to "follow their dreams" again.

this is not about ny...this is about the world. to the extent that ny was always about money---it would seem to have to fall further than places like madison, wisconsin.

Something interesting- I have been a member of streeteasy for months and following the real estate market closely since September of last year, mainly for a condo in PS, BH, or CH in the 650-900K region. Hardly anything moved. Only one of the apartments we were interested in went into contract this whole time. But today, I get a streeteasy email update on my saved properties and it says 7 of my saved listings went into contract (3 in Manhattan). Another listing went into contract two weeks ago without the seller lowering the price.

I think there is only one Cobble Hill listing now left in my "saved" folder.
http://www.streeteasy.com/nyc/sale/421587-condo-301-warren-street-cobble-hill-brooklyn

A CH and a CG property became unavailable:
http://www.streeteasy.com/nyc/sale/400257-condo-344-degraw-street-cobble-hill-brooklyn?email=true (I think rented)
http://www.streeteasy.com/nyc/sale/367431-condo-carroll-gardens-brooklyn?email=true

Now, all of this is my personal experience. And I am not bullish on NY real estate- every party I go to is full of laid off bankers and lawyers (I am a lawyer myself) but I have to say after watching the market and my saved listings sit without any movement, I am pretty impressed by the fact that so many sold in the recent past. What remains to be seen is at what price.

Here are the properties that just went into contract:
CG:
http://www.streeteasy.com/nyc/sale/166075-condo-536-henry-street-carroll-gardens-brooklyn?email=true
CH:
http://www.streeteasy.com/nyc/sale/421466-condo-94-wyckoff-street-cobble-hill-brooklyn?email=true
Tribeca:
http://www.streeteasy.com/nyc/sale/407491-condo-275-greenwich-street-tribeca-new-york?email=true

Continued from before:
Mid town:
http://www.streeteasy.com/nyc/sale/386293-condo-300-west-53rd-street-clinton-new-york?email=true
West Village:
http://www.streeteasy.com/nyc/sale/389694-condo-27-commerce-street-west-village-new-york?email=true
Cobble Hill:
http://www.streeteasy.com/nyc/sale/351647-condo-62-bergen-street-cobble-hill-brooklyn?email=true

Continued from before:
Here is the CH listing that went into contract two weeks ago.
http://www.streeteasy.com/nyc/sale/418119-condo-361-clinton-street-cobble-hill-brooklyn
And here is one from PS that went into contract a while ago:
http://www.streeteasy.com/nyc/sale/368375-condo-502-1st-street-park-slope-brooklyn

So Sebb, I am watching a slightly different market segment but in the same areas- and it looks like there is some kind of change from the frozen market.

In my honest opinion, neighborhoods such as Brooklyn Heights, Clinton Hill and equivalent neighborhoods will decrease but will still be as expensive as they were in 1989.

Fringe neighborhoods will return to their organic value and will increase in increments in which they were intended. Fringe neighborhoods will return to their organic value due to the laws of nature being violated in addition to the economic crisis were in.

As long as were in this economic crisis, property values are going to decrease and fringe neighborhoods will hurt the most because the property value of those neighborhoods are returning to its natural value and the supply out weights demand in those neighborhoods. Afterall, the increase in property value in fringe neighborhoods were abnormal. We have to keep in mind, in order to afford property for 500k and better you would have to earn well over 100k and/or better a year and have a GREAT down payment, I don't see a migration of people making well over 100k and better a year and/or having a GREAT down payment moving to NYC for the purpose of living in NYC in expensive real estate.

NYC is not the only market that has an overwhelming supply of property. NYC is not desired to that extent too live in thats why NYC creating a pilot program for moderate to middle income families to reside in developments that are unoccupied and stalled. (once the stalled developments are complete) The original housing plan has failed and the pilot program is the unplanned contingent plan that has been recently planned.

"Clinton Hill and equivalent neighborhoods will decrease but will still be as expensive as they were in 1989. "

Do you want to take a look at what the actual numbers are for that to happen?

"According to Bloomberg "In 1999, the median sales price of all Manhattan apartments was just $310,000. By 2004, it almost doubled to $605,000. The average price per square foot rose from about $400 in 1999 to $1,251 last year."

I think the most precise anyone can get is that we'll fall somewhere between 1999 and 2002 prices. Even without an epic credit bubble bursting, Manhattan was long over due for a standard recession and retraction in prices. Given valuation heights by whatever metric you can use, is seems -50% is easy and although its hard to fathom, -75% is possible. I can't think of any killer arguments that 1999 prices (-75%) are impossible.

What do people think will happen to prices in prime Park Slope? (And, in particular, PS 321.) Prices seem to have budged a bit, but hardly more than 10%. And inventory does not seem high at all.

Its hard to believe that Park Slope is firm with Manhattan down 30%.

30yrs,

Sure I would like to see those numbers.

Miette, the is not a lot of inventory in prime PS, esp. in 321, as most of that "zone" is brownstones. There are some conversions here and there, but as someone that's been in the market for a 3 BR in PS for a while, specifically in District 15, the inventory that exists leaves a lot to be desired. The new and newer stuff is still going for about $750+/sq. ft., and a lot of it is tiny...for example 3 BRs in under 1200 sq. ft. No thanks. Like Currenttime, many of my saved sales also went into contract in the past week, and almost all of them were in PS. The brightside is that the ones that did go into contract seem to have been priced better than what I quoted above, and I am hoping were actually signed at a price even below that. Only time will tell. Obviously family-sized condos and coops go pretty quickly in a school district as solid as 15, no matter what "the market" is doing.

Miette, I think csmack implies a good point - you have to specify what kind of housing you're looking for. I think all types are falling in PS, just not at the same rate. I also think those places that went into contract didn't sell for peak prices. They weren't even listed at peak prices. They were priced more or less 'reasonably' to reflect current circumstances.

I look at 2 BRs. In PS, there are many 2 BRs being listed at <600K. Given that all these places would've asked $650K-$750K or more less than a year ago, I think PS prices are clearly under pressure. Serious sellers are actually getting serious about selling (say THAT three times fast!) and prices reflect that.

In my opinion, what you can expect to pay depends on how long you're comfortable waiting before buying. There's NOTHING on the horizon that suggests even a stabilization of prices at current levels. I think they're going down further. My $.02.

Not sure what happened there, but my post got truncated. Here's the whole thing:

Miette, I think csmack implies a good point - you have to specify what kind of housing you're looking for. I think all types are falling in PS, just not at the same rate. I also think those places that went into contract didn't sell for peak prices. They weren't even listed at peak prices. They were priced more or less 'reasonably' to reflect current circumstances.

I look at 2 BRs. In PS, there are many 2 BRs being listed at less than $600K. Given that those same places would have asked $650K-$750K less than a year ago, I think PS prices are clearly under pressure. What you can expect to pay depends on how long you're willing to wait. There's nothing on the horizon that suggests prices are going to stabilize even at current levels. I think they're going down further. My $.02.

Nobody asked Sebb about his timeframe--by this December? A year from now? Also, he's talking townhomes, I think he might mean the whole buidling, not apartments in general.

Prime Brooklyn and Wall Street are joined at the hip. I would look hard at Wall Street trends to speculate on this, as well as real estate trends.

{peaceful agent-to-be}

Wisco - I feel compelled to comment on your final paragraph. First off, Williamsburg is in Brooklyn - seriously, look it up. Second, most of my fraternity brothers live in Brooklyn - and most work in finance. Sorry, you can't have gentrification without the moneyed class moving in. Third, B&T means bridge & tunnel - this typically refers to the obnoxious Long Islanders and Jerseyites that come into the city on Friday and Saturday nights and act like douche-bags. We Manhattanites pay a great deal to not be confused with this species.

The rest of your post is OK.

"In my honest opinion, neighborhoods such as Brooklyn Heights, Clinton Hill and equivalent neighborhoods will decrease but will still be as expensive as they were in 1989."

I like Clinton Hill, but you have to be joking to equate it to Brooklyn Heights in terms of retaining value.

"Fringe neighborhoods will return to their organic value and will increase in increments in which they were intended. Fringe neighborhoods will return to their organic value due to the laws of nature being violated in addition to the economic crisis were in."

Organic value? Increments in which they were intended? Laws of nature being violated? What kind of bs reasoning is this? There's no set plan here - the market runs its course whether or not you feel anything's been "violated."